Berkeley Homes to set up housing association arm

Housebuilder to create own housing association as part of switch to regeneration and social housing

Berkeley Homes is to complement its plans to build social housing by setting up its own housing association division to run the finished product.

The move is a surprising one for a housebuilder that built its reputation on providing luxury detached homes before moving into the regeneration sector.

Berkeley is understood to be looking at the scheme as part of a plan to win a slice of the Housing Corporation’s £3.3bn in social housing grant, which is being made available to private housebuilders for the first time this summer.

Tony Pidgley, Berkeley chief executive, said: “We are considering setting up a housing association to take ownership of the affordable housing we build. It’s a major part of our delivery programme, so why leave it to chance? Why sell affordable homes to an association through the planning system when you might not get a good price?

“Our idea is to take the grant from the government and hold the homes we build with it as an investment. You can hold on to it and sell it once the price has gone up.”

Berkeley builds 4000 homes each year, of which 1000 are affordable or social housing. Much of its business is in London and the South-east where funding is being targeted.

The government wants to build 10,000 extra units of social housing each year by 2008. It is expected that Berkeley’s housing association would subcontract the management of the homes to another association. A similar approach has been piloted by Bellway in east London.

Terry Fuller, chair of the affordable housing group at the Home Builders Federation, said: “You have to watch what Tony is doing. He has been doing this far longer than anyone else, so if he’s spotted something in this then it is definitely worth other builders having a look at it.”

Pidgley said there was also room for firms to come in to raise standards in the management of affordable and mixed-tenure schemes.

He said: “I want to see more management companies in the market as we feel there is huge scope for this to be done better.”

The Housing Corporation is due to announce today who will be appointed deputy chief executive with responsibility for heading the £3.3bn affordable housing programme. The favourite is interim deputy chief executive Steve Douglas.